Panel Autoregressive Distributed Lag Research Articles

The nexus among digital financial inclusion, monetary policy transmission, and economic development in Sub-Saharan Africa

This paper aims to examine the complex relationship between digital financial inclusion, monetary policy transmission, and economic development in 18 Sub-Saharan African countries from 2004 to 2021. The study utilizes panel data and employs a digital financial inclusion index, broad money growth, and real gross domestic product per capita as proxies for digital financial inclusion, monetary policy transmission, and economic development, respectively. The panel autoregressive distributed lag model results uncover a bi-directional causality between economic development and digital financial inclusion, emphasizing the pivotal role of digital financial inclusion in fostering economic development. Additionally, another bi-directional causality between digital financial inclusion and monetary policy transmission highlights their interdependence. Unidirectional causality from monetary policy transmission to economic development is also established. This study emphasizes the crucial role of robust measures in enhancing digital financial inclusion to avert adverse consequences, offers nuanced insights into policy dynamics, particularly regarding inflation mitigation, and enhances monetary policy effectiveness. These findings underscore the importance of policy reform, legislation, and regulatory improvements to promote digital financial inclusion by Sub-Saharan African central banks. Strengthening rural financial infrastructure is crucial for driving digital financial inclusion, sustainable economic development, and reducing regional inequalities.

Achieving sustainable development in ECOWAS countries: the impact of trade openness, poverty and human capital

This study investigates the relationship among trade openness, poverty, and human capital development in the pursuit of sustainable development across a panel of ten ECOWAS economies over a 34-year period (1987–2020). Specifically, it examines the roles of trade openness, poverty, and human capital development in sustainable development, while also exploring the moderating role of trade openness on the poverty-sustainable development relationship within the ECOWAS region. To conduct this analysis, the study employs panel autoregressive distributed lag (ARDL) using both the Pool Mean Group (PMG) estimator and Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) techniques, taking into account cross-sectional dependence, cointegration, and other relevant diagnostic tests. The findings indicate that poverty has a consistent negative long-run impact on sustainable development, while human capital is positively associated with sustainability over the long term. Trade openness lacks a significant relationship with sustainability in both the short and long run. Inflation is insignificantly related to sustainability. Exchange rates demonstrate mixed effects. In terms of moderation, trade openness positively and significantly moderates the poverty-sustainability relationship in the long run but not the short run. Robustness testing using the AMG and P-OLS models further validates the significant positive impact of human capital and the insignificant effect of trade openness on sustainable development. Given poverty’s significant negative association and human capital’s positive link with sustainable development, the findings suggest the need for integrated policy mixes prioritizing multidimensional poverty reduction and human capability enhancement to promote sustainability objectives across both short- and long-term horizons in ECOWAS countries. Furthermore, prudent management of exchange rates and well-designed trade policies should complement these efforts to mitigate potential risks and harness any benefits for sustainability.

Exploring the Impact of Remittance and Economic Growth on Inflation

This study investigates the influence of remittance income and economic growth on the inflation rate in South Asian Association for Regional Corporation (SAARC) countries. Remittance inflows have a double effect on the economy’s inflation rate: firstly, it increases consumer spending capacity, driving up demand for goods and services, which can lead to higher prices; secondly the influx of foreign currency can cause local currency appreciation, raising import costs and contributing to inflation. While previous studies have focused primarily on how inflation hinders economic growth, this study seeks to understand how economic growth causes inflation from the other side. Economic growth boosts consumer and business spending, increasing demand for goods and services, which can increase prices. Furthermore, higher demand for resources and labor can raise production costs, further contributing to inflation. The correlation between remittance income and inflation has been extensively documented, but the impact of economic growth on inflation remains to be determined. The study is based on descriptive and exploratory research design and driven by a positivist research philosophy. The present study is based on secondary data collected from World Bank reports and the countries’ economic surveys. This study uses an unbalanced panel dataset of 272 data points from eight member countries of SAARC. Basic econometric techniques such as covariance analysis, panel unit root testing, panel autoregressive distributed lag model, and scaled coefficient analysis are employed. The remittance income is only statistically significant at the 10 percent significance level. A one percent increase in remittance income leads to a 0.284 percent increase in inflation over the long run. The growth rate of gross domestic product plays a crucial role in setting inflation. One percent rise in gross domestic product growth leads to a 0.3405 percent increase in inflation in the long term. The error correction term exhibits a negative and statistically significant relationship. The coefficient size suggested that around 65.14 percent of the disequilibrium was rectified in each cycle. The current year’s lagged gross domestic product growth negatively and statistically significantly impacts economic growth. One percent rise in gross domestic product growth led to 0.3308 percent fall in inflation in the short term across SAARC countries. The results indicate that remittance income has a minimal long-term effect on inflation in SAARC nations, whereas gross domestic product growth substantially impacts inflation. Policymakers should prioritize promoting sustainable economic growth to mitigate inflationary pressures effectively.

Investigating the impact of credit channels, energy production and oil revenues on agricultural development in sub-Saharan Africa

Development of the agricultural sector can numerously gift the economy by ensuring food security and rural livelihoods, fostering economic growth, reducing poverty, promoting social stability, and achieving sustainable development goals. But agricultural activities especially in Sub-Saharan Africa are faced with numerous challenges like lack of required credits to the farmers, unavailability of needed energy for powering the farm machinery and transportation of farm produce, and fluctuation of crude oil prices which serve as the main source of energy in Sub-Saharan Africa. However, the sequel to these highlighted challenges that face agricultural activities, this study examines the impact of credit channels, energy production, and oil revenue on agricultural development in sub-Saharan Africa using an annual time series covering 21 years (2001–2021) drawn from selected sub-Saharan African countries under study. Using the panel autoregressive distributed lag model (ARDL) as the baseline model and the generalized method of moment (GMM) as the robustness check, we made the following findings. From the ARDL perspective, we found that credit channels have a negative impact on agricultural development. In contrast, energy production and oil revenue have positive and negative significant impacts on the agricultural development of sub-Saharan Africa. Further, results of the Generalized Method of Moment (GMM) revealed that while credit channels have both negative and positive long-run relationships with agricultural development, energy production, and oil revenues have positive and significant long-run relationships with agricultural development in sub-Saharan Africa. The study concludes that credit channels have both negative and positive long-run relationships with agricultural development. In contrast, energy production and oil revenue have negative and significant long-run relationships with agricultural development in sub-Saharan Africa. We recommended effective agricultural credit provision and a mechanized farming system to increase the quality and quantity of food supplies in sub-Saharan Africa.

Does the digital economy improve female employment? A cross-country panel data analysis

The digital economy has had an impact on the female employment rate over time. Currently, the researchers are more interested in investigating the impacts of the digital economy by focusing on its various aspects of female employment. The current study is motivated by this renewed interest to investigate the impact of the digital economy on female employment rates in Asian Developing Countries from 1990 to 2021. The digital economy is measured by several indicators such as fixed telephone subscriptions, fixed broadband subscriptions, mobile phone subscriptions, secure internet servers, and internet users. The Panel Autoregressive Distributed Lag (PARDL) model is used for analysis that reveals a positive relationship between female employment rates and the digital economy in both the short and long run. The control variables/factors, Education and GDP, also showed positive relationships with female employment. We suggest that governments prioritize funding for digital infrastructure and encourage fair access to technology, especially for women, based on our study. Furthermore, the positive effects of the digital economy on female employment can be strengthened through focused policy interventions, such as offering financial incentives to companies that hire and train women in digital skills. By utilizing these tactics, policymakers can guarantee that women are prepared to take advantage of the chances brought about by the quickly changing digital landscape, promoting gender equality and inclusive economic growth throughout Asian developing nations.

DIGITAL FINANCIAL SERVICES AND THE PERFORMANCE OF THE QUOTED COMMERCIAL BANKS IN NIGERIA

Objective: The study aims to examine the causal relationship as well as short-term and long-term dynamic effects between digital financial service components and on the performance of the quoted commercial banks. Method: The study employs a cross-sectional descriptive survey research with ex-post facto research. Descriptive statistics were used to analyze responses and opinions, while inferential statistics including the dynamic Panel Autoregressive Distributed Lag (PARDL) approach, Panel Granger Causality Test. Results: The Granger Causality analysis reveals that Agency banking exhibits a strong causal link to ROA (p=0.003<0.05), emphasizing its predictive power for ROA variations. Also, ATM banking has a weaker influence on ROA (p=0.08>0.05), while internet banking (p=0.049<0.05) and mobile banking (p=0.0001<0.05) both impact ROA significantly. The long-term analysis using the autoregressive distributed lag (ARDL) model indicates that agency banking (β=0.128, p < 0.05), ATM banking (β=0.566, p < 0.05), internet banking (β=0.514, p < 0.05), and POS activities (β=0.118, p < 0.05) all have positive impacts on ROA. In the short term, these variables also show positive coefficients, suggesting immediate effects on ROA. Error correction (ECTt−1) has a negative coefficient (β=-0.06, p < 0.05), indicating its role in short-run adjustments to deviations from long-run equilibrium. Overall, agency banking, ATM banking, internet banking, and POS activities are crucial drivers with strong statistical significance, while mobile banking has limited influence on ROA. Based on these findings. Conclusion: The study recommends that financial institutions should strategically prioritize agency banking services and enhance internet banking services to positively impact ROA. Resource allocation for ATM banking should be reevaluated, and POS-related strategies may not be a priority for improving ROA. Additionally, financial institutions should adopt a long-term perspective when planning and implementing these services, and invest in enhancing their digital financial services to boost customer satisfaction, fostering loyalty and retention.

Assessing the Impact of Technological Innovations and Trade Openness on Environmental Sustainability: An Empirical Study of South Asian Economies Using Panel ARDL Approach

This study examines the major factors that influence environmental sustainability over a 20-year period (2000–2020) in the four South Asian economies. In this study, two methods of estimation including the Pool Mean Group (PMG) estimator and the panel autoregressive distributed lag (ARDL) approach are used. The findings explore that trade openness, energy consumption, and economic expansion have a long-term positive and considerable impact on environmental deterioration, conversely technical innovation has a long-term negative impact on the environment. In short run scenario, trade openness and energy usage have significant and favourable effects on environmental degradation, whereas the economic growth and technological advancement have had a substantial negative influence on the environment. From this study, the policy makers provide the direction to the government by incentivizing technology, enforcing energy-efficient laws, promoting renewable energy, aligning trade policies with environmental goals, and enhancing regional cooperation. In order to improve South Asian environmental sustainable policies, future research should examine energy-trade-growth-technology by employing advanced techniques, and prioritizing innovation.

Exploring the Dynamics of Trade in Developing Countries: A Panel ARDL Analysis of Renewable Electricity, Labor Force, and Economic Factors

This study looks at how important economic, environmental, and labour force variables interact with trade dynamics in emerging nations. The study examines the relationship between trade and renewable power generation, labour force participation, and economic indicators throughout the period from 2000 to 2023 using a panel Autoregressive Distributed Lag (ARDL) approach. With the exception of CO2 emissions, which show a negative correlation, the results show a strong positive association between trade and the variables under investigation. These results highlight the significance of sustainable economic development methods in promoting trade growth in poor countries and throw insight on the intricate processes influencing trade patterns.

Advancing environmental sustainability in the G-7: The impact of the digital economy, technological innovation, and financial accessibility using panel ARDL approach

This study examines the impact of the digital economy, technological innovation, financial accessibility, and urbanization on CO2 emissions in the G-7 region from 1990 to 2019. The analysis employed Cross-Sectional Dependence (CSD) and Slope Homogeneity tests, revealing the presence of CSD issues and heterogeneous slope coefficients. First- and second-generation panel unit root tests indicated no unit root problem within the dataset, with variables showing mixed integration orders. Panel cointegration tests confirmed that the variables are cointegrated over the long run. To assess the short-run and long-run impacts of the explanatory variables on CO2 emissions, the study utilized the Panel Autoregressive Distributed Lag (ARDL) model. The findings indicate that the digital economy significantly reduces CO2 emissions, while economic growth, technological innovation, financial accessibility, and urbanization increase CO2 emissions in the G-7 region. The robustness of the Panel ARDL results was validated using Driscoll-Kraay standard errors, Augmented Mean Group (AMG), and Common Correlated Effects Mean Group (CCEMG) estimations. Additionally, the Dumitrescu-Hurlin causality test revealed a unidirectional causal relationship between the digital economy and CO2 emissions, GDP and CO2 emissions, and CO2 emissions and technological innovation. Furthermore, bidirectional causality was found between financial accessibility and CO2 emissions, as well as between urbanization and CO2 emissions. These findings provide comprehensive insights into the dynamic interactions between economic, technological, and environmental variables in the G-7 region, highlighting the complexity of achieving sustainable development.

Impact of Information and Communication Technologies and Renewable Energy Consumption on Carbon Emissions in Africa

The pursuit of economic growth has implications for carbon emissions and climate change. Achieving low carbon development is important for attaining the targets of the sustainable development goals. Africa is often described as a largely import-dependent continent. The continent also requires significant investment in information and communication technologies (ICT) and renewable energy to achieve low-carbon economic growth. However, empirical evidence on the joint impacts of imports of goods and services, clean energy use, ICT, and economic growth on carbon emissions in Africa is scanty and mixed. This paper investigated the impacts of information and communication technologies, renewable energy consumption, import and economic growth on carbon emissions by using rich data on total per capita carbon dioxide (CO2) emissions, economic growth, import of goods and services, renewable energy consumption, fixed telephone subscriptions, mobile cellular subscriptions, and individuals using the internet in Africa (2001 ─ 2020) obtained from the World development indicators (WDI) database. Using the Panel autoregressive distributed lag model (PARDL), we found that mobile cellular subscriptions, and level of economic growth significantly increased per capita CO2 emissions in Africa in the long run while renewable energy consumption and technologies and import of goods and services significantly decreased per capita CO2 emissions in the long run. We conclude that information and communication technologies, level of economic growth, import of goods and services, and renewable energy consumption exert impacts on carbon emissions in Africa.

Analyzing the impact of fiscal conditions on private health expenditures in OECD countries: a quantile ARDL investigation

Organization for Economic Co-operation and Development (OECD) countries have embraced the aim of universal health coverage, as established in Sustainable Development Goal (SDG) 3.8. This goal guarantees access to quality healthcare services without financial hardship or poverty. Additionally, it requires correct and adequate financing sources. A country with weak protection for its population tends to spend less on healthcare and experiences a high share of out-of-pocket payments (OOPs), increasing the likelihood of people falling into poverty. This study aims to understand the relationship and causal effects between macroeconomic and public fiscal conditions and private health expenditure in OECD countries between 1995 and 2019. We retrieved OECD data for 26 OECD countries for the period 1995–2019. Panel AutoRegressive Distributed Lag (PARDL) and panel quantile AutoRegressive Distributed Lag (PQARDL) models were estimated to examine the relationship between private health expenditures and macroeconomic and public fiscal variables. Our results reveal a positive influence of government debt and economic freedom on private health expenditures. They also show a negative influence of the government budget balance, government health expenditures, and economic growth on private health expenditures. These results collectively suggest that public fiscal conditions will likely impact private health expenditures. The findings of this study raise concerns about the equity and financial protection objectives of universal health coverage in OECD countries.

Financial dynamics, green transition and hydrogen economy in Europe

The introduction of the Next Generation funding scheme provides an opportunity for the EU-25 to make significant financial progress towards a radical and fully sustainable Green economy. This study examines the financial implications of a complete transition to hydrogen energy. In this paper, we propose the Hydrogen Production Safe Supply and Storage energy model by analyzing the conversion of electricity from offshore wind farms to hydrogen, which serves as both an energy storage and fuel for a variety of sectors, including transportation, households, industries, and governments. We analyze the financial impact of the Green transition across the EU-25 economies, based on a panel auto-regressive distributed lag model and the simulation procedure proposed by Jordan and Philips (2018). In addition to electricity production and consumption, the variables used include greenhouse gas emissions, real output per capita, and total environmental tax revenue. According to the study's financial insights, increased renewable electricity production results in a significant reduction in household energy consumption, as well as an increase in consumption in the transportation, industrial, and public sectors. These findings underscore the economic implications of transitioning to renewable energy and highlight the financial imperatives, such as targeted state aid, the immediate expansion of the hydrogen supply network, further research on safe mobile hydrogen containment, and an extensive upgrade of the regional hydrogen supply network within the EU-25.

Examining the impact of geopolitical risk on foreign remittances: evidence from top remittances receiving countries

Purpose This study investigates the impact of geopolitical risk (GPR) on foreign remittances (FRs) for the top remittance-receiving countries.Design/methodology/approach The sample includes Mexico, France, Egypt, China, the Philippines, India, Vietnam, Ukraine, Germany and Belgium for the annual period of 1998–2022 using the nonlinear panel autoregressive distributed lag (ARDL) model to determine the asymmetry in the relationship.Findings The results suggest that, in the short term, positive GPR shocks have a positive and significant impact on FRs received. On the other hand, the long-run results suggest that adverse GPR shocks negatively affect FRs received in the sampled countries. Additionally, the study confirms the asymmetric impact of GPR on top remittances received in countries.Research limitations/implications The policymakers, migrants and recipients should consider the asymmetric nature of GPR while making decisions regarding policies and the transfer of remittances. This information can be used to create more effective policies for controlling and reducing the effects of GPR on overseas remittances, such as assisting migrant workers and developing methods to lessen the volatility of these flows.Originality/value Acknowledging the potential fluctuations and uncertainties associated with GPR is crucial to make informed choices regarding remittance-related matters.

Quantifying the Impact of Natural Resources on Sustainable Growth in Developing Economies: Evidence from Panel Nonlinear ARDL Technique

The main purpose of current research is to analyze the impact of natural resource exploration on sustainable growth in developing economies. Annual panel data of 57 developing countries from 2000 to 2021 has been used for research analysis. First, this study uses a simple Panel Autoregressive Distributive Lag (ARDL) estimation technique to examine the long-run and short-run link among the variables. The results depict that in the long run natural resource exploration has a significant negative impact on sustainable growth. This finding supports the presence of the resource curse hypothesis. Besides this, the present study decomposes the policy variable (mining contribution index) into its two shocks i.e. positive shock and negative shock by applying a panel non-linear ARDL approach. The long-run outcomes depict that both the coefficients of partial positive and partial negative sums of natural resource rents are negative and significant. Furthermore, the research outcomes explain that financial openness and international trade have a substantial and positive impact on sustainable progress. The policy implications for current research are to avoid bad rent-seeking behaviors and to escape from non-productive activities to achieve sustainable development. Furthermore, there is a dire need to adopt and support environmentally friendly policies.

Quantifying the Impact of Natural Resources on Sustainable Growth in Developing Economies: Evidence from Panel Nonlinear ARDL Technique

The main purpose of current research is to analyze the impact of natural resource exploration on sustainable growth in developing economies. Annual panel data of 57 developing countries from 2000 to 2021 has been used for research analysis. First, this study uses a simple Panel Autoregressive Distributive Lag (ARDL) estimation technique to examine the long-run and short-run link among the variables. The results depict that in the long run natural resource exploration has a significant negative impact on sustainable growth. This finding supports the presence of the resource curse hypothesis. Besides this, the present study decomposes the policy variable (mining contribution index) into its two shocks i.e. positive shock and negative shock by applying a panel non-linear ARDL approach. The long-run outcomes depict that both the coefficients of partial positive and partial negative sums of natural resource rents are negative and significant. Furthermore, the research outcomes explain that financial openness and international trade have a substantial and positive impact on sustainable progress. The policy implications for current research are to avoid bad rent-seeking behaviors and to escape from non-productive activities to achieve sustainable development. Furthermore, there is a dire need to adopt and support environmentally friendly policies.

Does energy transition reduce carbon inequality? A global analysis.

Energy transition from fossil fuels to renewables is instrumental in mitigating climate change. Low-income countries have a higher share of renewable energy in their total energy consumption than rich countries (WDI, 2023). Thus, it is imperative to examine the role of energy transition in affecting relative CO2 emissions between rich and poor sections of the societies across income groups of the countries. In this context, our study contributes by constructing the carbon inequality models with renewable and non-renewable energy consumption as prime explanatory variables separately for 114 countries over a data period 1990-2019. The models are estimated individually for high-middle-low-income countries by controlling for foreign direct investment (FDI), economic growth, and innovations. Starting with preliminary econometric operations, we employ the dynamic simulated panel autoregressive distributed lag approach and Driscoll-Kraay standard error regression for empirical investigation. We find that energy transition reduces carbon inequality globally. Innovation has a negative impact, economic growth has a positive impact on carbon inequality, and FDI has an asymmetric impact based on the income level of the countries. The crucial global policy implications are discussed.

Revolutionizing Banking: Neobanks’ Digital Transformation for Enhanced Efficiency

Changes in customer behaviors after the COVID-19 pandemic have encouraged the transformation of banking systems. Neobanks have emerged as an innovation and entered the banking system to compete with traditional banks by offering new customer experiences. Neobanks transform traditional banking products and services which are delivered through physical interactions into those delivered via digital channels. This paper analyzes traditional banks that have transformed into neobanks, specifically their efficiency after digital transformation. Efficiency was measured using Stochastic Frontier Analysis (SFA), as it is highly accurate in estimating efficiency scores. This study also used a Pooled Mean Group (PMG) estimation of the Panel ARDL (Autoregressive Distributed Lag), as this approach is useful for analyzing the relationship between variables in panel data, to investigate digital transformation as a determinant of neobanks’ efficiency and examine the existence of short-term and long-term relationships between digital transformation and efficiency. We found that the efficiency of neobanks increases after digital transformation. Furthermore, it can be concluded that digital transformation is a determinant of efficiency and that there is long-term relationship between digital transformation and efficiency. In the short term, digital transformation has a significant negative correlation with efficiency, but in the long term, it has a significant positive relationship; this is because the cost of digital transformation initially decreases the profit efficiency, but afterwards, it increases the efficiency.

How do R&D and remittances affect economic growth? Evidence from middle-income countries

Sustainable development through technical progress for middle-income countries (MICs) is overlooked in growth allied studies. Despite their crucial role in alleviating poverty and resource shortages, MICs encounter challenges in global economic competition, driving persistent efforts to find practical solutions. Therefore, this study explores the integrated impact of R&D expenditure and remittances on economic growth in MICs. Using data from 25 MICs between 1996 and 2021, this study employs the “2nd generation unit root” and “panel autoregressive distributed lag (ARDL)” methods. The “feasible generalized least square (FGLS)” techniques and the “Dumitrescu-Hurlin (D-H)” causality test are employed to verify the robustness of the panel ARDL estimation. The Westerlund cointegration tests confirm a long-term cointegration between variables. The findings of the panel ARDL approach show that R&D expenditure and remittances positively and significantly influence economic growth. The robustness of the panel ARDL results is confirmed by the FGLS estimation, which produces similar outcomes. The outcomes from the FGLS and the ARDL methods are additionally validated by the D-H causality check. Therefore, encouraging R&D and remittances is crucial to accelerate middle-income nations' economic growth. The study reveals a novel mechanism of R&D expenditures, remittances, and economic growth in MICs, shaping their mutual influence on this economic landscape. The study supports middle-income countries' policymakers in creating effective policies for their financial institutions regarding R&D expenditure and remittances.

Dynamics of resource allocation–firm performance relationship: Panel autoregressive distributed lag approach

AbstractThe present study aims to unravel the intricacies of the resource allocation–firm performance relationship by examining the impact of resource allocation to research and development (R&D), advertising, inventories, and wages and salaries on firm performance, considering both short‐term and long‐term dynamics This work is conducted using a sample of 240 listed Indian manufacturing firms over a time span of 18 years, that is, from 2006 to 2023. Based on the empirical findings from the dynamic panel autoregressive distributed lag (ARDL) model, it is revealed that, in the short term, allocating resources to areas such as R&D, advertising, inventories, and wages and salaries has a detrimental effect on sales. However, in the long term, these resource allocations show a positive impact on sales. Regarding stock market performance, both R&D and advertising exert a negative influence on Tobin's Q in the short term, but their impact becomes positive in the long term. In the case of inventories and wages and salaries, their effects evolve over time: Initially, in the short term, both have a positive impact on Tobin's Q, but this effect switches to negative and becomes significant in the long term. The key contribution of this study revolves around a model‐driven approach aimed at tackling the complex issue of resource allocation and its dynamic impact on performance outcomes.

Correction: Knowledge Economy and Financial Development in Developing Countries: Evidence from a Panel Autoregressive Distributed-Lag (ARDL) Approach

Correction: Knowledge Economy and Financial Development in Developing Countries: Evidence from a Panel Autoregressive Distributed-Lag (ARDL) Approach